June 15, 2022 was a pivotal date for BTS and their recording company, HYBE.
On this day, Hybe confirmed that its flagship group would be subject to obligatory military service in their home country, South Korea, starting in 2025.
This shocking announcement startled investors, causing the company’s shares to plunge by approximately 25%, resulting in a loss of around 1.5 billion dollars in market capitalization.
At that time, BTS was not only the most significant revenue generator for Hybe. According to IFPI, they also held the title of the World‘s largest recorded music artists in 2021 and 2020.
Clearly, Hybe continues to feel the effects of BTS’s absence.
Financial Impact and Future Outlook
The K-Pop giant published its financial results for the fourth quarter of 2024 (February 25), reporting a record 1.65 billion dollars in annual income last year. However, the operating profit dropped by 37.5% year, to KRV 184.82 billion (135.55 million dollars), attributed mainly to the “temporary BTS gap.”
In a discussion with income analysts, HYBE’s financial director, Köng-June Lee, explained (translated into English), that “there are two main reasons for the decrease in operating profit, despite record revenue for the 2024 financial year.
Firstly, Köng-June Lee stated, “the income mix of Hybe artists has changed due to the absence of BTS and the debut of new groups.”
Additionally, according to the financial director, there have been “investments related to new artists’ debut in the United States, reduced activities from artists under Hybe America, and costs associated with developing human resources and infrastructure for Hybe Latin America.”
However, the financial director sought to reassure investors, indicating that BTS’s return is forthcoming.
The company anticipates that “margins will improve this year due to the return of BTS’s economic impact and the growth scale of Hybe Music Group artists,” added the financial director of HYBE.
The BTS machine is gradually gearing up for a return to the spotlight.
The CEO of HYBE, Jason Jason Lee, noted in his opening statement regarding the company’s income that BTS members Jin and J-Hope completed their military service in June and October, respectively, and resumed (commercial) activities for their solo projects last year.
Meanwhile, the other five members, Suga, Jimin, RM, V, and Jung Kook are expected to complete their military service by the end of 2025.
During the company’s conference call on Tuesday (February 25), the HYBE leadership team was asked to explain the “income” of BTS in the past against the company’s prospects for overall income (HYBE) during 2025.
In response, the CEO stated: “Regarding income from BTS and our music business, as you know, we do not disclose specific income breakdowns.
“However, BTS has been the backbone of Hybe, and the company has grown alongside them. Since the IPO in 2020, you can infer some indicators concerning BTS’s income contribution.”
Lee then clarified that while he could not provide a “specific number at the moment,” he confirmed that BTS’s contribution to total revenue was “slightly below 20%” as of 2024.
This percentage, according to the CEO, “had dropped significantly, around 95%, especially when BTS members began their military service.”
He added, “There was some solo activity in 2024, but their contribution percentage was lower because there were no concerts.”
“I can assure you that you have some indicators regarding the income contribution from BTS. This percentage has decreased significantly, approximately 95%, particularly since the BTS members commenced their military service.”
Jason Yasang Lee, Hybe
Lee reiterated the points made by the financial director of HYBE regarding the conclusion of military service and the return of BTS members as they “resume concerts and other activities.”
“We anticipate that their income contribution will increase in the future,” Lee stated.
“At the same time, our other artists are also rising in popularity and class, giving us a more balanced portfolio of artists moving forward.”
He further added: “Although the contribution percentage of BTS revenues may decrease, we recognize that BTS holds significant symbolic importance for Hybe, as they have been with us since the inception of the company.
“Regardless of their contribution to total income, we view BTS as a flagship artist for Hybe. Thus, we will continue to support them in delivering outstanding performances and achieving global success in the future.”
Lucas focuses on the interaction between music and society. He specializes in how music influences and reflects cultures, analyzing the role of sound in social, political, and cultural events around the world.
